IRA Rollover Basics: The 60-Day Rule, Limits, and Withholding

Moving retirement money from one account to another sounds administrative, and most of the time it is. But the mechanics carry deadlines, withholding rules, and a frequency limit that can turn a routine transfer into a taxable distribution. This page covers what the rules are and how the two transfer methods differ. It does not tell you whether to move an account — that depends on facts this page cannot see.

What a Rollover Is

A rollover moves funds from one retirement account to another without the transfer counting as a taxable distribution. The money keeps its tax-deferred status, and nothing is reported as income for the year, provided the transfer follows the rules below.

Rollovers happen between several account pairings: an employer plan to an IRA, an IRA to an employer plan, one plan to another plan, and one IRA to another IRA. Which pairing you are dealing with matters, because some of the rules below apply to only one of them.

A rollover is not a withdrawal. The distinction is not cosmetic. A withdrawal is a distribution you keep, taxed as income and potentially subject to an early-withdrawal penalty. A rollover is a transfer that happens to pass through a distribution event. The paperwork can look similar, and the tax outcome is entirely different.

Direct Transfers and 60-Day Rollovers Are Not the Same Thing

There are two mechanisms, and the choice between them drives most of what follows.

Direct transfer (trustee-to-trustee). The money moves between institutions without being paid to you. You never take possession of it. In the IRS’s words, “no taxes will be withheld from your transfer amount.”

60-day (indirect) rollover. The distribution is paid to you, and you deposit it into the receiving account yourself. The IRS frames it plainly: “if a distribution from an IRA or a retirement plan is paid directly to you, you can deposit all or a portion of it in an IRA or a retirement plan within 60 days.”

Everything below — the deadline, the frequency limit, the withholding — attaches to the second mechanism far more heavily than the first.

The 60-Day Deadline

“You have 60 days from the date you receive an IRA or retirement plan distribution to roll it over to another plan or IRA.”

Miss the window and the distribution generally becomes taxable income for the year, with an early-withdrawal penalty possible depending on your age and circumstances. The IRS may waive the deadline in limited circumstances where the failure was due to events beyond your control, but a waiver is an exception granted on specific facts, not a routine backstop.

The 60 days run from the date you receive the distribution, not the date it was requested or the date it was mailed.

The One-Rollover-Per-12-Months Limit

This one catches people, because it is narrower than it first appears and its exceptions are broad.

The rule: “Beginning after January 1, 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own.”

Note the two qualifiers. It applies to IRA-to-IRA rollovers specifically, and it counts across all your IRAs — holding several does not give you several rollovers.

The IRS lists transfers that are not subject to the limit:

• Rollovers from traditional IRAs to Roth IRAs (conversions)
• Trustee-to-trustee transfers to another IRA
• IRA-to-plan rollovers
• Plan-to-IRA rollovers
• Plan-to-plan rollovers

The practical consequence is worth stating explicitly: a trustee-to-trustee transfer is exempt from the frequency limit entirely. The limit constrains the 60-day mechanism, not the movement of money between IRAs as such.

The 20% Withholding Rule

“A retirement plan distribution paid to you is subject to mandatory withholding of 20%, even if you intend to roll it over later. Withholding does not apply if you roll over the amount directly to another retirement plan or to an IRA.”

Read that twice, because the arithmetic surprises people. If an eligible rollover distribution from an employer plan is paid to you, the plan withholds 20% before you see it. To complete a full rollover within 60 days, you have to deposit the entire original amount — including the withheld portion, which you no longer have. Depositing only what arrived leaves the withheld 20% treated as a distribution, taxable and potentially penalized.

The withheld amount is credited against your tax liability when you file, so it is not lost. But it is not available during the 60-day window, which is when you need it.

This rule applies to distributions from employer plans. Withholding on IRA distributions follows different rules and is generally elective.

What Cannot Be Rolled Over

Not every distribution is eligible. From an IRA, the IRS excludes:

• A required minimum distribution
• A distribution of excess contributions and related earnings

From a retirement plan, the exclusions are longer:

• Required minimum distributions
• Loans treated as a distribution
• Hardship distributions
• Distributions of excess contributions and related earnings
• A distribution that is one of a series of substantially equal periodic payments
• Withdrawals electing out of automatic contribution arrangements
• Distributions to pay for accident, health, or life insurance
• Dividends on employer securities
• S corporation allocations treated as deemed distributions

Required minimum distributions appear on both lists. If you are of RMD age, the year’s required amount must come out and stay out — it cannot be included in a rollover.

Traditional-to-Roth Conversions

Moving money from a traditional IRA to a Roth IRA is a rollover in the IRS’s framing, and it is exempt from the one-per-12-months limit. It is also a taxable event: pre-tax dollars moving into an after-tax account are generally included in income for the year of the conversion.

That tax consequence is the whole substance of the decision, and it turns on your marginal rate now versus later, the size of the balance, and where the tax payment comes from. Those are facts about your situation, not about the rule. A tax professional is the right party for that conversation.

Frequently Asked Questions

What is the difference between a transfer and a rollover?

In common usage the terms blur, but the mechanism matters. A trustee-to-trustee transfer moves money directly between institutions without paying it to you — no withholding, and it is exempt from the one-per-12-months limit. A 60-day rollover pays the distribution to you first, starts a 60-day clock, and, if it is an IRA-to-IRA move, counts against the annual limit.

How many IRA rollovers can I do in a year?

One IRA-to-IRA rollover in any 12-month period, counted across all IRAs you own rather than per account. Trustee-to-trustee transfers, Roth conversions, and any rollover involving an employer plan are not subject to that limit.

Why did my plan withhold 20% when I was rolling the money over?

Because the distribution was paid to you rather than sent directly to the receiving account. Mandatory 20% withholding applies to eligible rollover distributions from employer plans paid to the participant, “even if you intend to roll it over later.” A direct rollover to the receiving plan or IRA avoids it.

Can I roll over a required minimum distribution?

No. Required minimum distributions are excluded from rollover eligibility from both IRAs and employer plans. The required amount for the year has to be distributed and cannot be moved into another retirement account.

What happens if I miss the 60-day deadline?

The distribution generally becomes taxable income for that year, and an early-withdrawal penalty may apply depending on your age and circumstances. The IRS can waive the deadline in limited situations where the failure resulted from circumstances beyond your control, but that is a fact-specific exception rather than something to plan around.

Is a Roth conversion subject to the one-rollover-per-year rule?

No. The IRS lists conversions from traditional IRAs to Roth IRAs among the transfers not subject to the limit. Conversions are, however, generally taxable in the year they occur.

Rules on this page reflect the IRS’s published rules as of August 2026. Retirement account rules change through legislation and inflation adjustments — check the IRS rollover rules for the current position, and confirm plan-specific rules with your plan administrator, who sets terms the IRS does not.

Related reading: Roth vs. Traditional IRA, 401(k) basics and contribution limits, and the self-directed investor’s guide.